Editor AccountingWEB
Share this content
Eat Out to Help Out
Flickr_HMTreasury

HMRC interrogates 12,000 over Covid scheme fraud

by

HMRC has conducted more than 12,000 investigations into the use of coronavirus support schemes, including the furlough scheme and the self-employed income support scheme. 

30th Jun 2021
Editor AccountingWEB
Share this content

The tax authority has revealed that thousands of businesses are under investigation for coronavirus fraud following a freedom of information (FOI) request from the law firm BLM. 

The 12,000 probes into the misuse of the furlough, SEISS and Eat Out To Help Out schemes cover the period up to the end of March. The investigations are triggered when HMRC suspects error and fraudulent risks for each of the schemes. 

The coronavirus job retention scheme was the biggest target for fraud, with HMRC undertaking 7,384 compliance interventions. These interventions have so far led to five arrests. Meanwhile HMRC had opened 5,020 investigations into SEISS by the end of March, with no arrests as of 28 March. The Eat Out to Help Out scheme had the fewest with 424 investigations and three arrests.

The thousands of potentially fraudulent claims do not include cases where coronavirus fraud or infringements form only a minor aspect of the case.   

“When taking the various other recovery schemes aimed at businesses into account, such as the Bounce Back Loans (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS), it is not unreasonable to suggest that we are talking about losses in the billions through fraudulent activity.” said Iskander Fernandez, partner at BLM.

“As it takes time for HMRC to build a case, it’s unlikely that we’ll see an immediate wave of arrests and prosecutions. However, it’s a case of when, rather than if, given that thousands of interventions are currently underway.”

An increase in compliance investigations

The number of compliance investigations are more than likely to rise, and have already substantially increased since BLM’s FOI request. 

On a recent episode of AccountingWEB Live’s Tax Talk, Kate Upcraft said that there are “at least 20,000 plus investigations going on at the moment”. 

Register for free to continue reading

It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:

View all AccountingWEB content
Comment on articles
Watch our digital shows and more

Access content now

Already have an account?

Replies (10)

Please login or register to join the discussion.

avatar
By Paul Crowley
01st Jul 2021 11:07

I certainly hope a lot more coming.
Provided they are aimed and genuinely risk based.

Thanks (2)
This is me
By LVW4
01st Jul 2021 11:15

As one of the 3 million who have not been supported, I hope HMRC makes an example of the many thousands who have defrauded the various [taxpayer funded] schemes. BBLs are a prime example, and there doesn't appear to be any mention of how many of those HMRC is investigating. But they must be the easiest to assess because HMRC will have the history of how long the business has been operating profitably and submitting returns. Which makes me wonder how these fraudsters were able to obtain BBLs in the first place, when they had clearly set up businesses very recently and purely to claim the BBL.

Thanks (3)
Replying to LVW4:
avatar
By johnjenkins
01st Jul 2021 11:26

BBL's aren't the responsibility of HMRC. It is the bank's fault if they gave money to business that had just registered etc.
A few of my clients took out the BBL because they weren't sure of the future but intend paying it all back in one go now that there is light at end of tunnel.

Thanks (0)
Replying to johnjenkins:
This is me
By LVW4
01st Jul 2021 12:28

Yes, it may be poor procedures by the banks, but the loans are underwritten by the government [ taxpayer]. If not HMRC, who is responsible for investigating the massive fraud?

I can see the banks crying that they weren't given sufficient time to put the correct procedures in place, but if some could, so could the rest. It is not a difficult process to do a quick look-up at Companies House. All the business banks will have that interface. I guess they simply weren't bothered because they knew the taxpayer would be picking up the cheque!

Thanks (1)
Replying to LVW4:
avatar
By johnjenkins
01st Jul 2021 13:25

Nobody will do anything, let alone take responsibility.

Thanks (1)
Replying to LVW4:
avatar
By moneymanager
01st Jul 2021 17:35

I know of one man companies who took the maximum £50,000 eligible or not, even where they were eligible some were subsequently prevented from "bouncing back" by continued restrictions, in other circumstances that would be called mis-selling and in some there isn't the faintest chance of any recovery, tje lights are already off.

Thanks (1)
Replying to moneymanager:
This is me
By LVW4
01st Jul 2021 18:22

My point is, how did these fraudulent applications get through? Yes, you were required to 'self declare' but surely there was at the very least a simple check on filed accounts to prove previous earnings.

Thanks (0)
avatar
By nullah
01st Jul 2021 12:18

yes definitely with Bbl. it seems it was loot of the century we hear people getting 50000 100000 loans and we see our roads full of range rovers and teslas and many more while were in lock down ? where was this coming from , how did people grew in such bad economic times? simple answer the careless government schemes and BBl was such a mess , no criteria checked properly and no follow ups where money went , it need to be seen and looked into case by case. This is purely governments fault to allow people to take opportunity to cheat the exchequer when leaving such easy ways.

Thanks (0)
avatar
By AndrewV12
02nd Jul 2021 09:39

I Heard yesterday up to 50% of bounce Back Loans will never be repaid, what was the Chancellor thinking, I know 'other peoples money'.

Thanks (0)
Replying to AndrewV12:
avatar
By johnjenkins
02nd Jul 2021 09:42

I very much doubt that anybody knows what proportion (percentage wise) or what actual payments are repaid.

Thanks (0)